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Interest Rates

Since spring of this year, the Sacramento Real Estate market has started seeing trends that makes me wonder what the next year will bring. Last year and the first few months of 2013 were for lack of words, frantic. There were dozens of offers on each listing, prices were increasing by the hour, and buyers needing financing found it tough to get into escrow on a home.

Then Spring and early summer came along and interest rates increased a point in reaction to fiscal news of an improving economy and possible decrease in stimulus funds. The interest rate increase just about killed profits for investors putting 20% down on properties and financing the rest. Other cash investors moved on to markets outside of Sacramento where prices hadn’t increased 30+ percent over the last year. I read not long ago that Stockton is now the new hot spot realizing high increases…just a few months delay behind Sacramento and they will be right where we are now.

In my opinion, the once frenzied real estate market has somewhat normalized over the past few months. Listings that go on the market at atrocious prices aren’t getting showings….or offers. Open house agents are reporting crickets when their sellers want to start out at too high of a price. Not too long ago, listing your home at a high price was “normal”…and you would even get offers above list price, with buyers removing their appraisal contingencies and willing to pay the difference between appraised value and offered price! Today, the days on market counts on MLS are increasing, sellers are finding themselves reducing their list prices to compete with nearby listings, and buyers have once again started asking for home warranties and pest clearances…those “extras” that we never asked for before when there were 12 offers on the table.

I personally think this is good for the local real estate market in Sacramento. If we had continued to increase at 30+ percent appreciation in values per year over a long period of time, I think there would have been the possibility of another dreaded bubble. Today, I think we hopefully flushed the frenzied activity out of our system and have plateaued at a normal growth level that we can hopefully sustain over time. Local trend graphs are showing changes in the market over the past few months, with a large increase in inventory of homes coming on the market, sellers reacting to competition coming on the market around the corner, and buyers having more power in their pockets. I for one look forward to normalcy when two hours on the market doesn’t mean the home is already sold to a cash buyer. The buyers that need to sustain our market and our economy are not those that have cash…they are those that need financing.

I’ll continue to keep you posted as more changes happen in the local market. Send me any questions/thoughts!

Yesterday brought us some good news for some homeowners who would love to refinance to the current low rates, but haven’t been able to since they are underwater! HUD, or the US Department of Housing and Urban Development, announced that they have agreed to make FHA Streamline Refinance opportunities more affordable beginning June 11, 2012 for homeowners who last purchased or refinanced their home prior to May 31, 2009. Both the Upfront Mortgage Insurance Premium (MIP) and the annual premium will decrease significantly over current rates! If you have an FHA loan, you may qualify to refinance your mortgage and save hundreds of dollars per month, EVEN if your home is underwater!

Qualifications

Mortgage must be FHA, not conventional (ie, you probably put 3.5% down when you bought your house)

Mortgage must have been originated prior to 5/31/09, or last refinanced prior to 5/31/09.

Borrower must be current on their mortgage payments

Call your lender for details to see if you qualify! I have great recommendations for Sacramento area mortgage lenders on my “vendors” page! Good luck!

Every time I think mortgage rates can’t possibly go even lower, they continue to surprise me. Here’s a great visual for you to see exactly what rates have been doing since 2000. It’s a great time for first time buyers, investors, and all buyers to get in the market or refinance their existing mortgage. If you need referrals to some of my favorite lenders, please check out my “vendor” tab on this site…and then start saving money!

WASHINGTON — The average rate on the 30-year fixed mortgage jumped after standing pat for three straight weeks at record lows. But the rate stayed below 4 percent for the 12th straight week, keeping home-buying and refinancing attractive for those who can qualify.

Mortgage buyer Freddie Mac said Thursday the rate on the 30-year loan rose to 3.95 percent. That’s up from last week’s rate of 3.87 percent, the lowest since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage rose to 3.19 percent from 3.16 percent. It hit a record low of 3.14 percent three weeks ago.

So far, low rates have done little to help the housing market, which is slowly improving. Few people can qualify for the rates and many who can have already done so.

The four-week average of home purchase applications dropped in late January and February while refinancing is mostly flat, according to the Mortgage Bankers Association. Refinancing now makes more than 81 percent of mortgage activity.

But the housing market is flashing signs of health ahead of the spring-buying season. Sales of previously occupied homes are at their highest level since May 2010. More first-time buyers are making purchases. And the supply of homes fell last month to its lowest point in nearly seven years, which could push home prices higher.

The job market is also improving, which is critical to a housing rebound. In January, employers added 243,000 net jobs – the most in nine months – and the unemploymentrate fell to 8.3 percent, the lowest level in nearly three years.

Frank Nothaft, Freddie Mac’s chief economist, said the housing market is gradually starting to pick up. Still, home sales remain weak and it could take years for the market to fully return to health.

To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fees for the 30-year and 15-year loans were unchanged at 0.8.

For the five-year adjustable loan, the average rate fell to 2.80 percent from 2.82 percent, and the average fee fell to 0.7 from 0.8.

The average on the one-year adjustable loan fell to 2.73 percent from 2.84 percent, and the average fee was unchanged at 0.6.